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SUMMARY AND CONCLUSIONS
Indians are presumably proud of the IT and ITES (Information
Technology Enabled Services) industry which has virtually changed the way
the world looks at India and how Indians look at themselves. The venture,
which has been carried out here by the researcher, was basically an inquiry
into the evidence behind this euphoria. The economic scrutiny in search of
this evidence has been primarily finding out the extent to which, the Indian
software industry is competitive. In this journey, the researcher studied and
analyzed a large number of books on software industry and IT, articles,
theses and other literature.
Studying the nature of the Indian software industry has been the
primary task this study aimed at. Some notable findings have been put into
limelight. The size of Indian market for its own software is a small one. Over
the years the share of domestic market in total software revenue has been
declining. Different econometric models have been applied over both the
domestic software revenue and the export revenue. The exponential model
has been found to be the most suitable one. Compound model, power
model, S model, Growth model, Logistics and Exponential model were all
having almost same values of model adequacy. However, the exponential
model suits best for the cause primarily because of three reasons. Firstly,
the trajectory of software industry in India can best be explained in terms of
an exponential growth pattern. Secondly, the said model is one, which is
widely accepted by the discipline of economics. The third reason is the
uniqueness of interpretation. This model has taken into consideration 99.5
percent of all the variations in the software export domain and 98.3 percent
in the arena of domestic software revenue.
It is also found that the gap on exponential growth pattern between
export and domestic revenue will get widened over the years to ensue.
From the study, it is also established that there is a need for leveraging the
domestic market. In the absence of a booming domestic market, Indian
skills and labour will continue to be taken away by the overseas firms and
markets.
Structural alterations of the economy in line with the efficiency,
profitability and productivity are advocated. Likewise, a slew of protection
measures are desired in order to safeguard Intellectual Property Rights
(IPRs). The export competitiveness of software industry in the light of the
performance of domestic software revenue has been analyzed.
A separate chapter has been dedicated for the comparative study of
India, Israel and Ireland. These three countries are catching up with the
advanced world in software innovation and industry. All the three are cited
as the success cases of 1990s.When dealing with this comparative study,
two kinds of econometric investigations have been carried out. The first kind
of econometric investigation aimed at constructing a feasible economic
model and the second one aimed at analyzing the export performance of
India, Israel and Ireland in combination, on lines of panel auto regression. In
case of Israel, it is understood that some major aberration could be
observed in the exponential growth pattern. The year 2001,2002 and 2003
__ .. ____________ .. _ .. ____ . ___ . _____ . ___ . ___ ._. __ ._._ .. _____ ._ .. ___ . __________ ~ummary and Conclusions 196
have witnessed either no growth or negative growth. Under the exponential
model, the R square value for Irish exports estimated at 0.988. The CAGR
for Ireland is only 0.171. There is a clear inference that even though Ireland
is the leader among the three, India could aptly be called 'the leader
prospect'. The CAGR of India was the highest among the three and it was
nearly double the value of Ireland. Israel and Ireland were successful
because all benefited from a strong national emphasis on advanced
technical education that dates back at least one or two generations. Strong
human capital in software cannot emerge within a few years.
Although they are leaders in software technology, their specialization
and domain of expertise are different. For example, Ireland has specialized
in the services projects, and into niche product markets, while Israel
specialized in software products, especially in data commutations and
information security. On the other hand, India has been specializing in
customized service software and its export.
By taking into account the software export figures of India, Israel and
Ireland, two models have been developed - both a fixed effects model and
a random effects model.
The fixed effects model for India is constructed as
1'; = 0.9632191';_1 + 0.5929 + el
The fixed effects model for Israel is
1'; =0.9632191';_1 + 0.4921 +e2
___ .. __ .... _ .. _____ ._ .. _ .. _. ___ .. ______ . ____ .. ________ .. _. __ . _______________ ~~"!mary and CDnclu~~_~ 197
The Irish fixed effects software export model is,
y, = 0.963219Y,_1 +0.4729+e3
The R square value is 0.9978, which is significantly high. Also, since
Durbin Watson Statistics is 1.78, the serial correlation in the error terms, is
virtually absent.
The fixed effects model suggests that the export of the next fiscal
depends up to 96.32 % of the export of the current fiscal for all the three
nations. Even in this case, the fixed effect coefficient is different for all the
three countries, which implies the prospective variation in the future exports
of the 3 specialized nations. But it is found that the fixed effect coefficient is
more favorable in case of Indian export. The built up and implicit software
skill and proficiency testifies that Indian industry (when constructed this
model) will contribute more for its future export growth, when compared to
that of both Israel and Ireland.
The alternatively tested model is the random effects model
The random effects model for India has been
Y, = 0.608626 + 0.951265Y, -1 + 0.0542 + el
In the same way, the random effect model for Israel is
y, = 0.608626 + 0.951265Y,_1 -0.0299+e2
The same for Ireland is constructed as
Y, = 0.608626 + 0.951265Y,_1 - .0265 + e3
__________ . ____ . ____ .. ___ ._. __ . _____________ .______________ Summi!Y a.nd ~~~~lusiD~_ 198
In this case, the model adequacy is 98.93 percent. The Durbin-
Watson Statistics indicates the absence of serial correlation.
The above models interpret that the export of the next fiscal depends
up to 95.12 percent of the export of the current fiscal, for all the 3 nations.
The random effect for India is a positive one i.e., 0.056 while Israel and
Ireland capabilities are negative. The prospective capability in mature
software exporting of India is a unique one since this country alone has a
positive random coefficient among the 31's. Thus, higher export
competitiveness is evident in case of India when the historic export figures
had been applied for scrutiny.
The investigator attempted to find out a comprehensive solution by
way of finding out Indian software export determining factors through a
primary survey, which encompasses the responses of competent personnel
from IT industry. The major determining factors such as Government Policy,
Management, Cost, Quality, Competition, External Environment, Manpower,
Infrastructure, Industrial and Economic system and its growth Marketing and
Non-economiC/ cultural variables have been taken into consideration.
Size of software firms has been taken as a scale for measuring the
influence of governing factors of software industry and export. Industry
response has been measured in terms of variance in order to find out the
extent of impact of each of the factors upon the different sized firms. A multi-
dimensional scaling diagram was moulded employing fourteen major factors
there by understanding the relative loadings of each of these factors.
___ .. __ .... ___ .. _ .... ____ ...... __ ..... ________ .... _ .. _ .. _. __ ...... __ .. _ ... _____ ~~!!'.'!!~.~'!..~CDn~~sil!..~. 199
IT industry experts from big firms were not found to have a concrete
opinion as regards the impact of government policy initiatives upon the
growth of the industry .. On the contrary, medium and small-size firms
believe that the state machinery can play a dynamic role in creating a
competitive environment. The small firms agree more in this regard when
compared to the medium firms. It is also found that the three kinds of firms
have different viewpoints regarding the role and dynamism of govemmen ~
facilitationl regulation. ~
to Legal and Commercial System in India, they are of the opinion that legal
and commercial system in India promotes rather than demotes the cause of
software firms.
IPR regime is a crucial factor, which determines the development of
innovation, new start-ups and flow of capital. Existing accounts prove that
there is a high rate of piracy prevalent in India .On the question of whether a
system of weak IPR regime hampers the interests of software firms in India,
big and medium firms replied positively. But the small firms expressed the
opinion that their prospects are not ruined by IPR regime in India. The
researcher deduces that this difference emerged due to the small firms'
concentration on services rather than products. This reason is
complemented by another fact that piracy is mainly affecting the products of
well-established firms. It is understood that the opinions differ significantly.
Indian entrepreneurs express their concern that getting the nod and
licence of different departments of the government for a new start up are a
_ .. _ .... _._ ...... ____ ... _. __ . ___ .. _____ . _____ . __ ._ .. _._ ... _._ ....... __ . __ .. _ .. __ ._._._. _________ ._. __ ._._._sul11mary and CDnclusiDn~_ 200
cumbersome and time consuming process. Therefore, a single window
facility should be facilitated to provide the relevant information as well as
assistance regarding various procedures to be compiled with. When opinion
of the respondents were sought whether the absence of single window
facility curtail the prospects of entrepreneurial activity in India, all the three
groups consented that such an infra structural and policy loopholes curtail
the prospects for setting up and expansion. The opinions expressed in this
regard by the three groups are 01"\ similar lines.
Strong management capability is a pointer to software process
capability. The strength and competency in management shall be
considered to be the backbone of software firms and industry. On the
question of whether firms are run mostly by technicians who are deficient of
proper management skills, the response has been affirmative. Small firms
overwhelmingly supported the statement. The extent and degree of support
has decelerated from small to big firms.
On the question of Organization Culture (OC) in India's cyber world,
all the three kinds of firms responded against the intent of the query. All
have disagreed that the OC hampers the prospect of software innovations
and export. It is found out from the analysis of variance that the OC in
software industry in India is conducive to its development, as against the
anticipated notion of outdated organization culture. It is also understood that
the opinions are of similar kind.
Big IT firms as well as medium IT firms opine that the state-the-art
technology is we 11- established and sophisticated in India. Since this
technology is not a backward one, this does not hamper the growth of
software industry. On the other hand, the small firms responded positively
that the inefficient adoption of technology is a crucial factor, which obstructs
the development of IT. It is analyzed from the IF' test that all the three kinds
of opinions differ significantly.
The competitive advantage in cost acts as a supportive mechanism
for India's success in the export of software. India is a country, which is
known for cost effectiveness in the IT industry. But with the phenomenal
growth in the sector over the decades, the wage gap between Indian
software professionals and their counterparts in the developed nations has
started to shrink. Nevertheless, cost advantage remains substantial even
today.
The constraints of venture capital create a lot of initial hurdles when
starting up a software firm. Since the success of a new firm depends on a
number of externalities, the financial organizations rarely come forward to
put their money into the investing in a new software startup.
In the research analyses, all the three kinds of firms are found to
agree that the absence of venture capital and seed money pulls back
entrepreneurs from entering the business on a massive scale. Nevertheless,
the small firms have increasingly felt for a mechanism of availing ready
venture capital.
Similarly all have unanimously agreed that a low wage structure
compliments India's comparative advantage in software development and
_____ . ___ . _______ ._._._ .. __ .. _._ .. __ ._. ______ . ____ ... _ ... _ .. _ .... _. __ ........ _ ... _ ... _ .. _______ SummarI~~ CDnclusiDn~ 202
export. However, it is to be noted that the comparative advantage of a
competitive cost structure has been diminishing because, a number of
developing economies have started to train their young manpower into the
software expertise
A strong commercial software technology and the continuity in
climbing the value chain help firms to attract overseas business. Big,
medium and small firms confirmed that the speedy delivery of services adds
to the credibility of Indian companies and the quality certifications like CMM
help them to pick pocket overseas money. The ANOVA test revealed that
the size should not be treated to be a factor guiding quality since the
responses did not vary significantly.
The extent and degree of competition has been increasing in IT
sector. The Indian firms increasingly face competition from firms of Ireland,
East European nations and those developing nations which are striving their
level best to gain their own place in the map of global software technology
and business.
All kinds of firms unanimously asserted that their foreign counter
parts pose severe competition. It became conspicuous that the competition
between the firms of the same country (in this case, India) reduces their
prospects as well as profitability. This results in a sort of unhealthy
competition, which reduces the margins of Indian companies.
It is validated that although the competition posed by countries like
Ireland, Israel etc. is not something neglible, there has been no evidence
_--.-.-.-.-.---..... -.--.--.-.----.--.-.-.-..... ------____ . ________ .. ______________________ !u~mary and CDnclusiD~ 203
na! a substantial degree of competition is prevailed. It is found that these 3
major players were not competitors among themselves. When analyzed the
causative rationalities, the researcher could find that the targeted
specializations and areas where the three nations are oriented were almost
different and varied. While India has been a major exporter of services,
Ireland and Israel have been concentrating on high-end services as well as
products and packages. Israel is world - renowned in security related
packages. "
Globalization has ushered in a new era where the notion of self
reliance has become a myth and changes in one part of the globe create
consequent ripples in other parts as well. The macro economic growth and
ever increasing industrial activities in the U.S. created opportunities for
Indian software firms. Outsourcing has become the order of the day. It could
be established that the policy interventions of overseas nations like visa
policy diminish the interests of software players.
The tremendous scientific and technological resource base is cited
as the prime input behind India's software success. It has been argued by
many scholars that in India, software talent is plentiful but experienced
engineers and managers are deficient in number. Project management
expertise is said to be scarce in India. It is inferred from the study that
experienced talents in India are deficient in number.
A large reserve of English speaking manpower has been considered
a national asset and a real point of attraction. The different kinds of firms
consider alike that the pool of such a reserve contributes to their success
and the fortunes of the country.
Infrastructure in India is in serious doldrums. Of the many supportive
mechanisms entrepreneurs require, infrastructure is considered to be one of
the most critical. Big and medium players claimed that substandard
telecommunications infrastructure and poor transmission quality curtail the
growth prospects of ICT (Information and Communication Technology). But
the conformity level has been a little marginal in case of small firms. It is
understood that although poor infrastructure is a cause of concern for all, it
retards the prospects of big and medium firms more.
The role of Software Technology Parks (STPs) is analyzed to be a
crucial one and that the small firms have increasingly felt the need for such
STPs. It is believed to be due to the fact that small firms resort more to the
provisions of infrastructure made by other institutions, especially, the State.
It shall be specified that a firm's size matters when it comes to the
infrastructure space. A poor state of infrastructure is frequently cited as a
reason which constraints the vast potential of Indian IT firms in delivering a
global model.
The total industrial and economic system and its growth are highly
critical in determining the growth prospects of software industry. Thus, in
tandem with the mercurial rise in economic and industrial activities, the
prospects of software development multiplies. But the verified result brings a
different picture. The statistical analysis brought a reasoning that the firms
of all different size consider that the role of the overall economic and
_____ ...... __ .. __ . __ . ___ .. _. __ ._ .. _____ .... __ ... ____ .. __ ._. __ . ___ ._. __ .. _ ...... ___ . _____ .... _. __ . ___ . Summary and Conclusions 205
industrial structure in the development of software industry is a small one.
This is analyzed to be due to the low scale percolation of software
applications in the domestic economy. However, small firms find an
emerging role of economic and industrial system, compared to the other two
groups. Consequently the opinions differed substantially.
Complexity and expansion in industrial activity necessitate software
application. The pace of industrialization in other nations promotes the
prospects of Indian software industry and its export. All claimed that the
rapid pace of external industrial activity and its growth help the Indian
players in accelerating their export. The test of significance proved that the
three different groups have got the similar viewpoints.
All the three groups also confirmed that the low profile electronics
and hardware sector retards the prospects of software on a massive scale.
Some policies, for example, the quantitative restrictions on imports of
hardware and software during the early years, reduced initial prospects for
growth in the software industry. And, the similarity in opinions reflects that
the size of an IT firm does not matter when analyzing its outlook on the
scale of havoc wreaked by a low-profile domestic electronics and hardware
industry upon the software industry and its exports.
Branding is comparatively immaterial in case of India since this is
mainly a service provider. Still, liaison building and marketing are
considered crucial for software firms' export growth. Even though there was
many an initial hassle, Indian players' international marketing expertise is
claimed to be efficient and substantial. The major reason that China lags
behind India might be due to a lack of marketing acumen. But the Chinese
local product branding is said to be strong. Statistical analysis proved that a
small domestic market hampers innovation and software export of India. All
the firms were of the similar opinion.
Also, it is analyzed from the survey results that the big firms have had
sufficient degree of access to the export market. On the contrary, medium
and small firms face some bottlenecks on overseas marketing front. This
shows that both medium and small firms face a number of marketing
hazards in selling their products/services abroad. The test of significance
revealed that the opinions diverge considerably.
The participants from the survey supported the argument that the IT
firms in India are vehemently U.S. -centric and place Europe in the
backyard and this is a constraint, which adversely affects its growth and
export prospects. Small and medium firms supported the view overtly that
overemphasis on the American market limits the scope of Indian players.
The test of significance proved that the three groups are of different
opinions.
Non-economic variables influence how the people of a nation think
like to a great extent. Non-economic and/or cultural determinants guide the
way the development of software is made into effect. Empirical evidence by
some theses points that cultural issues can "make or break an offshore
project". It is argued by many that there is a 'programming mindset',
specially 'made in India'. In the subsequent analysis, it could be established
that no discrepancy was conspicuous for any group of firms in affirming that
___ .. ___ . ___ . ____ ... _ .. __ .. _ ...... _ ... __ . _____ . _______ . __ .. __ ... ________ ._. _______________ ~ummary and CD~~i~.!'.:;_ 207
India had an innate aptitude towards logical thinking and programming.
Many old-fashioned political and religious doctrines adversely affected
computerization and software development in Indian economy, as observed
in the study. The test of significance pointed to the fact that all the groups
were having the similar viewpoints regarding this.
The researcher has also studied various models constructed by
various authorities, which were basically created to suit the guiding factors
of the software export of a country. The researcher has understood the
need and necessity of the creation of a new model only when going through
these models. A new model called "Software Export Guiding Factors Model"
could be constructed in this study. But, the theoretical criticism done on the
said models are an important constituent of this study.
Michael Porter's model of competition advantages of nations, even
though it was a nascent attempt, had tried to find out the crucial factors that
lead into success in software exporting. But it was found out that the study
was more of a general nature than a specific one. Also the model did not
delimit the scope to the export spectrum alone. Rather, it had been
artificially moulded to suit to a national industry's resolve to achieve global
leadership over an extended period of time.
The criteria identification by Garry in his effort to construct a model in
World Bank report found success in categorizing software-exporting nations.
The major drawback of this study is found to be its lack of a systematic
approach. Though important factors were highlighted, the whole at one
Summary and CDncl~_~~!!! 208
hand and the synergic interaction of these four factors on the other hand
were ignored
The High Tech Indicators Model had succeeded in depicting socio-
economic factors. The study has taken the subject in a macro approach.
Both the cultural as well as structural factors could be taken into account in
this model. But it is worth mentioning that the underlying approach adopted
in the study was abstract rather than concrete.
The Software Export Success Model by Heeks and Nicholson shall
be considered to be the most comprehensive model. Software exporting
success of a number of new software exporting locations could be
employed when building this model. The authors developed the model from
success factors of India, Ireland and Israel, the success stories of
1990's.The model envisages almost all the important factors leading to
software export success. As well, the study scripts the need and necessity
of the production of high-end services as well as the need for innovative
products and packages in order to be a global leader. But it has not spelt in
detail how a transition is to be made possible from the exporter of low-end
services to the one of high-end software products, packages and services.
Also, this model cannot aptly be emulated in case of 3rd and 4th tier software
exporting nations
The "Oval Model" fit by Carmel emphasized on eight important
factors like government vision and policy, infrastructure etc. But the
industrial and economic system and its growth and its resultant 'cascading
effect' were neither envisioned nor considered in any of these models
_____ . __ .. __ ._ .. __ ._ ... _____ ._ .. ___ ...... __ ._. __ . ___ ... _ .. _________ ... __ ..... _ ..... ____ . __ ._ .. __ . ____ . ___ . ___ summar'll!!!~!~_~~~~~..!!'~ 209
including the 'Oval Model'. The change and growth in one sector of either
the national economy or the overseas economy will have its ripple effects on
other sectors as well, including the software. This aspect, which is one of
the most relevant factors influencing software industry and export, is almost
comprehensively ignored by these studies. Almost all these works have
tried to explore the effect produced by various factors on the total export
output of software. They could clearly identify many prime attributes of
cause. However, none of these studies could either measure or quantify the
marginal effect of one variable over the other or the combined effect or
interactions of different variables and factors upon the whole.
It is inferred from the SEM study that Cost , Competition , Manpower,
Government Policy and External Environment are having greater impact
upon the software export of the country.
It is also found out that Competition & Marketing, Government Policy
& Competition, Competition & Cost and Management & Marketing are highly
correlated. For instance, a unit changes in competition impacts 30 percent
effect on marketing of software. Similarly other covariance relations are
explained in the SEM.
The maximum likelihood estimates of all the eleven factors were
found out. For instance, Single Window Facility (G7) has a significance of
four times the significance of Intellectual Property Rights (G4).
The designing of SEM of Software Export Guiding factors has got
both theoretical as well practical advantages. The crucial point of
_ ... _._--_._ ... __ .. _._------_ ... __ ._._._-------- ___ ... ___ . ________________ Sum_'!1_II'Y and ~~~USiDns 210
significance of this study and model is its ability of quantifying each and
every weightage of all the different variables and factors influencing
software export and its competitiveness. Also, since the objectivity criteria
are maintained, the model conveys a value free approach. The policy
makers including government machinery would be at advantage while using
this model for future policy decisions, since the relative importance and
criticality of all the factors and its variable are detailed in the model.
Another major task, which was counted to be the basic motive of the
study itself, was to analyze how far the Indian software export sector is
competitive and to find out the position of Indian software in the arena of
global software industry. It is understood that many of the studies were not
able to exactly ascertain the comparative positioning of different software
states. Among the available tools used by different studies, AT Kearney
Attractiveness Index is taken for the purpose of identifying the location index
of prospective software nations.
. It is to be noted that the researcher here, has taken into effect all the
12 measurements of A.T. Kearney index, for the scope of this work. The
need for this study was felt when the researcher has gone through AT
Kearney Offshore Location Attractiveness Index (2004). It categorized 12
variables into 3 groups (Financial Structure, People skills and Availability
and Business environment). The researcher felt a dire need for the
modification of this index on account of two reasons. Firstly, the criteria
chosen by the research group for the ratio of 40:30:30 is subjective and it
does not bear a value free approach. Secondly, even though the economic
variables are highly correlated, this correlation aspect has not at all been
taken into account. Subsequently, the problem of multi-collinearity also has
not been solved.
The researcher identified two principle components W1 and W2.
0.453X1- 0.523X2 + 0.512~+ 0.773N + 0.0398Xs + 0.80Xs +
0.895X7+ 0.852Xa+ 0931Xg - 0.928X1o - 0.027X11 + 0.371X12
it
0.575 X1 +O.577X2+0. 704~+0.263N-0.666Xs+O.194Xs-O.087X7
0.1 08Xa-0.17Xs+O.072X10-O.221 X11-O.068X12
The first principle component variable was able to extirpate 71.016
percent of variance and the second principle component was able to wrench
out 18.056 percent of variance in the original data. When both the principle
components were clubbed together it has been able to distillate 89.071
percent of the total information. The AT Keamey offshore Location
Attractiveness Index 2004 suggested that India remained the star performer.
It reiterated that India captured the top slot due to its strong mix of low costs
and significant depth in human resources etc. But the researcher in this
thesis work claims that India lags far behind many other nations with regard
to infrastructure, security of intellectual property, tax and regulatory
environment, affordability and so on. The fact that India is trailing behind her
counterparts in determinants like infrastructure, acted as the stumbling block
for her to race to the top slot in competitiveness index prepared in this study
by the researcher. Having applied principal component analysis, it is found
out that India has been positioned 12th, i.e. in the middle position of the
__________________________________________________________________ _________ Summar.t~~~_~~".~!~~!~".! 212
ladder. Even though India is considered superior in terms of people skill and
availability, SPO experience etc., this country is trailing behind other nations
like Canada, Singapore and Australia mainly because of its inadequate
state of infrastructure, low employee retention etc. The relative positions of
India's counterparts in other popular ratings confirmed that the researcher's
claim with regard to India's positioning and competitiveness rating in this
study is true and empirical.
The comparative score India obtained in business environment and
infrastructure is very low. Similarly, India's credentials as regards financial
structure are also neither beckoning nor attractive
This shows that the fractured state of infrastructure and other support
mechanisms could offset India's reputed credentials of a concrete reserve of
skilled manpower. The major reason for India getting No. 1 slot in AT
Kearney Index was on account of the undue weight age given to one factor
(Le. people skill and availability). In this study, the researcher did scientific
apportioning of weight age for different variables of competitiveness. This
caused the slippage of India's positioning from top to the middle position of
the competitiveness and! or attractiveness ladder.
The first hypothesis of this study has been that the difference in
turnover growth between the domestic software sales and software export is
more or less constant. From the study it is found that the difference in rate
of growth in turnover between domestic sales and export is not constant. So
this hypothesis is rejected.
Summary and CDncl_usiD~ 213
The hypothesis that the export competitiveness of software industry
in India is not governed by any specific factor \ factors is rejected on the
ground that this study could ascertain specific governing factors.
Since both fixed effects co-efficient and random effects co-efficient
are more favourable for India than Israel and Ireland, the hypothesis that
they follow similar pattern in their export turnover and competitiveness is
rejected.
The hypothesis that the guiding variables of software industry in India
and its competitiveness are independent irrespective of size \ turnover of
software firms is rejected. ANOVA tests show that there are both
independent and dependent variables. Since there is presence of
dependent variables, hypothesis is rejected.
The hypothesis that the governing criteria, which guide the software
export and its competitiveness, are independent in nature is rejected.
Structural Equation Modeling (SEM) proves that there are interconnections
and a factor of dependence.
In terms of competitiveness, India's position in global software
industry domain is neither lucrative nor lukewarm is the last hypothesis
which has been set. From the Principal Component Analysis (PCA) method,
it was found that India's position is approximately a middle one. So the
hypothesis is accepted.
SUGGESTIONS
The comparative study of India, Israel and Ireland suggests that India
should specialize in products and packages and high-end services, rather
than concentrating on customized services alone.
The policy makers and the government machinery have to give more
importance to the development of domestic hardware and electronics
industry than the factors such as the upgrading of legal system etc.
Since Information and Communications Technology (leT) is one of
the most dynamic technologies, in order to sustain the observed rate of
growth in exports it is imperative that the industry moves up the value chain
and progressively increases domestic development with a focus not only on
software products but also on systems.
The Indian state should vigorously pursue its role of expanding and
modernizing transport and telecommunications especially the level of
connectivity and better bandwidth and the state-of-the-art technologies.
The competitiveness ranking of leading nations of the world suggests
that in order to advance towards better competitiveness standards, policy
makers should concentrate on the creation and betterment of infrastructure
foundations rather than anything else.
It is also important that all-out efforts should be made to perpetuate
and sustain India's relative advantage in low cost skilled manpower.
__ ._._._ ... _. ______ ... _. ____ ...... _._ ... ___ . ___ . ____ .. __ ._. ____ . __ .. _____ .... _____ ._ .... ______ ._~~~ary_~~d C!ncl~!~!.'.:I_ 215
SEM study suggests that the factors such as competition, cost
aspects, the impact of external environment, government policy and
manpower aspects are more critical when compared to factors like
management aspects, cultural system, quality parameters etc. Policy
makers should take into account this aspect also.
Indian computer software industry and export garnered tremendous
potential for its growth as a software super power. Export revenue double in
nearly three years. But this is not a time for complacency. The measures to
improve competitiveness like shifting to high- end products and services,
expanding the domestic software space, removing the structural
bottlenecks, maintaining the leadership in skills etc are imperative for the
advancement in India's software innovation, industry and export.